I. Introduction  4

II. Conceptual Framework: Monetary Policy and Global Supply Shocks  8

II.1 Global Supply Shocks in a New Keynesian Environment  8

II.1 Sources of Heterogeneity in Monetary Policy Responses  9

III. Empirical Strategy  10

III.1 Identifying Global Supply Shocks  10

III.2 Panel SVAR Model  12

III.3 Stylized Facts: Average and Heterogeneous Responses  13

III.4 Explaining Heterogeneity: Conditional IRFs  14

IV. How Do Central Banks React to Global Supply Shocks?  18

IV.1 Average Monetary Policy Response to Global Supply Shocks  18

IV.2 Monetary Policy Response to Global Supply Shocks: Over Time  20

IV.3 Heterogeneity Across Types of Global Supply Shocks  22

IV.4 Cross-country Differences within ASEAN+3  23

IV.5 Summary of Findings and Robustness Checks  23

V. Drivers of Heterogeneity in Monetary Policy: Shock Transmission  24

V.1 Policy Priorities  24

V.2 Role of Inflation Expectations  27

V.3 Persistence of Inflationary Transmission  28

V.4 Other Factors  31

V.5 Summary: What Matters Most for Monetary Policy Choices?  31

VI. What Explains the Changes in Monetary Policy Over Time?  32

VII. Drivers of Heterogeneity in Monetary Policy: Nature of Shocks  34

VIII. Conclusions  41

Appendix  47